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NSE Intra-day chart (13 January 2020)
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Market Commentary 14 January 2020
Benchmarks to open marginally in green amid positive global cues

 

Indian equity bourses touched new record closing highs on Monday, with Sensex and Nifty gaining around 0.60% each. After a strong opening, indices remained bullish, as India's factory output growth, measured by the Index of Industrial Production, grew 1.8% in November 2019, mainly on account of improvement in the manufacturing sector. Investors remained in optimistic mood, as the Union minister for micro, small and medium enterprises (MSMEs) Nitin Gadkari said that the Centre is formulating a scheme to encourage import substitute products in the manufacturing sector in order to save foreign exchange. Firm trade persisted over the Dalal Street throughout the trading session, on account of positive cues from the global markets. Market participants got comfort, amid a report stating that the country's foreign exchange reserves touched a record high of $461.157 billion, after it surged by $3.689 billion in the week to January 3. However, upside remained capped, after the SBI research report stated that the economic slowdown has adversely impacted employment generation in the country as nearly 16 lakh fewer jobs are projected to be created in FY20 compared to 89.7 lakh fresh jobs in FY19. Finally, the BSE Sensex gained 259.97 points or 0.62% to 41,859.69, while the CNX Nifty was up by 72.75 points or 0.59% to 12,329.55.

 

The US markets ended higher on Monday amid continued optimism about impact of the phase one US-China trade deal due to be signed later this week. Chinese Vice Premier Liu He is scheduled to visit Washington to sign the deal, which is said to include reduced tariffs on Chinese goods in exchange for increased Chinese purchases of US agricultural products. Treasury Secretary Steven Mnuchin said the agreement calls for China to purchase $40 to $50 billion worth of US agricultural products annually. Mnuchin described the agreement as very, very extensive, although the deal will not completely resolve the trade dispute between the US and China. Sentiments also got boosted after private reports said the Treasury Department plans to drop its designation of China as a currency manipulator ahead of the signing of the deal. A report said the trade agreement will include a section on Chinese currency practices that addresses many of the concerns raised when the US applied the manipulator designation last August. Besides, Boston Federal Reserve Bank President Eric Rosengren said that the economic outlook for 2020 is good, as he expects strong labor markets and low inflation to persist. He warned that central bankers do not have much historical experience of an environment where the unemployment rate has been so low and inflation so muted, and that the Fed must therefore be vigilant toward the possibility of higher inflation and undue risk taking.

 

Crude oil futures ended lower on Monday, amid easing worries about US-Iran tensions, resulting in the futures contract settling at their lowest level in about six weeks. Traders were looking to a number of monthly oil reports that are set for release this week - from the Energy Information Administration on Tuesday, the Organization of the Petroleum Exporting Countries Wednesday and the International Energy Agency on Thursday. Crude oil futures for February fell 96 cents or 1.6 percent to settle at $58.08 a barrel on the New York Mercantile Exchange. March Brent dropped 78 cents or 1.2 percent to settle at $64.20 a barrel on London's Intercontinental Exchange.

 

Rising for the fifth consecutive day, Indian rupee ended higher against dollar on Monday, on continued selling of the American currency by exporters and banks and easing crude oil prices. Sentiments remained buoyant with India's factory output growth, measured by the Index of Industrial Production (IIP), grew 1.8% in November 2019, mainly on account of improvement in the manufacturing sector. The IIP had contracted by 1.4% in August, 4.3% in September and 4% (revised) in October in 2019. A spectacular relief rally in local equities also supported the forex sentiment. However, gains remain capped with eminent economist R Nagaraj's statement that India would need to grow at 9% to achieve the target of $5 trillion economy by 2024, which currently looks unimaginably ambitious. On the global front, Sterling extended losses on Monday, after data showed Britain's economy grew at its weakest annual pace in more than seven years in November. Finally, the rupee ended at 70.86, 8 paise stronger from its previous close of 70.94 on Friday.

 

The FIIs as per Monday's data were net buyers in equity segment, while they were net sellers in debt segment. In equity segment, the gross buying was of Rs 4802.05 crore against gross selling of Rs 4143.49 crore, while in the debt segment, the gross purchase was of Rs 1099.91 crore with gross sales of Rs 1371.49 crore. Besides, in the hybrid segment, the gross buying was of Rs 160.00 crore against no gross selling.

 

The US markets ended higher on Monday fuelled by optimism about the signing of a preliminary US-China trade deal, as well as upcoming fourth-quarter earnings reports. All the Asian markets are trading in green on Tuesday as signs of goodwill between China and the US supported optimism for global growth, with the world's two biggest economies preparing to formalise a trade-war truce. Indian markets ended at record highs on Monday propelled by gains in Infosys amid positive industrial growth data. Today, the start of session is likely to be slightly in green following positive global cues amid hopes of further measures from government in the Budget 2020 and optimism over Q3 earnings. Investors will be looking ahead to the Wholesale Price Index (WPI) data to be out later in the day. Though, the upside may remain capped as the government data showed that  India's retail inflation spiked to a five-year high in December, breaching the upper end of the RBI's 2-6 percent target for the first time since July 2016. Inflation increased notably to 7.35 percent from 5.54 percent in November, driven by higher food prices. In the same period last year, inflation was 2.11 percent. Also, there may be some cautiousness with a private report indicating that the production of coarse grains, pulses, oil seeds and sugarcane is expected to decline in the summer season of 2019-20 due to late monsoon and erratic and heavy rains later. Traders may take note of report that Markets regulator SEBI has deferred by two years till April 2022 its directive for companies to separate the roles of chairman and managing director in view of demand from the corporates and to keep compliance cost lower amid a slowing economy. Meanwhile, the government is moving ahead to make Pension Fund Regulatory and Development Authority (PFRDA) as the sole watchdog for all pension products in the country and aims to bring the amended PFRDA Act in the upcoming budget session. There will be some buzz in the metal stocks as India imposed anti-subsidy duty for a period of five years on copper wire rods from Indonesia, Malaysia, Thailand and Vietnam after concluding a probe that these imports have impacted domestic players. There will be some reaction in cement stocks with a private report that amidst weakened demand conditions, the total installed cement capacity in the country is expected to cross half a billion tonne this year. MSMEs stocks will be in focus with private report said that commercial credit to micro, small and medium enterprises (MSMEs), which had been growing in the past couple of years, slowed down in the last two quarters. There will be some earnings announcements too to keep the markets buzzing.

 

Support and Resistance: NSE (Nifty) and BSE (Sensex)

 

Index

Previous close

Support

Resistance

NSE Nifty

12,329.55

12,297.65

12,349.60

BSE Sensex

41,859.69

41,753.76

41,932.63

 

Nifty Top volumes

 

Stock

Volume

Previous close (Rs)

Support  (Rs)

Resistance (Rs)

(in Lacs)

Yes Bank

1,947.34

42.10

40.80

43.65

Tata Motors

405.36

196.25

192.52

198.87

Infosys

369.52

773.55

759.87

782.37

SBI

236.15

330.75

328.05

334.45

Power Grid

155.71

194.80

192.73

195.93

 

  • Tata Steel's 100% subsidiary -- Tata Steel Netherlands Holdings BV has executed agreements for the refinancing of its bank debt.  
  • Vedanta's Jharsuguda Special Economic Zone unit (Plant-2) has received ISO 50001:2011 (Energy Management System) certification.
  • IOC and Oil India have signed a memorandum of understanding for collaborating on a unique CO2-Enhanced Oil Recovery project in Assam. 
  • ONGC has flagged off the offshore supply vessel Albatross-5 carrying cargo for Panna platform from the Shallow Berth jetty number 1 of JNPT.
News Analysis